More and more former hotels and offices are being converted into homes, and Manhattan is the epicenter of the market phenomenon.
A new report from real estate listings website RentCafe has found that adaptive reuse — which in this case specifically refers to commercial spaces being repurposed as residential properties — has surged in recent years, with 17.6% more apartments converted from outdated buildings in 2023 than 2022.
Across the country, 151,000 apartments-to-be are now in the process of being converted. That’s a 24% increase from the 122,000 units in the pipeline last year.
Most of these new abodes are being created by repurposing hotels, with a smaller contingent involving the repurposing of office space followed by, at a great distance, repurposed factories.
Manhattan is at the forefront of the surge. The city is currently home to 5.8% of all converted units in the US, and in 2023 nearly four times as many of its apartments were converted through adaptive reuse than 2022.
This, however, significantly had to do with a single project: The repurposing of a former hotel at 525 Lexington Ave., which yielded 655 student apartments.
Looking forward, Los Angeles is slated to overtake Manhattan, as its 5,881 units slated for conversion outnumber the Big Apple’s 4,363.
The adaptive reuse trend not only makes use of the many office buildings rendered vacant following the pandemic, but is also considered a more sustainable alternative to constructing brand new homes.
“The process minimizes the environmental impact associated with demolition and the production of new materials, making it an eco-friendly approach to design and construction,” said Doug Ressler, manager of business intelligence at commercial real estate data firm Yardi Matrix.
The process, though often complicated, is especially useful in locales that are burdened with a large number of empty commercial spaces, Ressler went on.
“Although these buildings pose challenges for conversion into residential spaces due to factors like building age, size, configuration, and location, repurposing them helps alleviate the shortage of rental units at diverse price points, especially in areas where vacant or underused buildings are prevalent,” he explained in the report.
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